franklin u.s. rising dividends fund...franklin u.s. rising dividends fund portfolio characteristics9...

Product Details1,2,3,4

Fund Assets $872,691,121.50

Fund Inception Date 12/01/1984

Number of Issuers 57

Base Currency CAD

Morningstar Category ™ US Equity

Distribution Frequency Annually

Risk Classification5

Low Low to Medium Medium Medium

to High High

Inception Date

Series F 12/01/1984

Fund Description

The fund seeks long-term capital appreciation by investing primarily in American equities, with at least 80% of net assets in companies that have paid consistently rising dividends.

Performance Data6

Average Annual Total Returns7 (%)

Calendar Year Returns (%)

1. Series I and V closed to new investors as of November 22, 2016. 2. Beginning in January 2017, investors switching between Corporate Class funds will trigger a capital gain or loss at the time of the switch due to certain changes in the income tax laws made by the federal government in 2016. 3. Series F is available to investors participating in programs that do not require Franklin Templeton to incur distribution costs in the form of trailing commissions to dealers. As a consequence, the management fee on Series F is lower than on Series A. 4. All holdings are subject to change. Holdings of the same issuers have been combined. 5. Each fund is assigned an investment risk rating in one of the following categories: low, low to medium, medium, medium to high or high risk. The risk ratings were determined using a methodology that assesses a fund’s historical volatility risk as measured by the standard deviation of fund performance. However, just as a fund’s historical performance may not be indicative of its future returns, a fund’s historical volatility may not be indicative of its future volatility. In addition, other types of risk may exist that can affect a fund’s returns. Please read the prospectus for more information on fund risk ratings. 6. The fund offers other series subject to different fees and expenses, which will affect their performance. 7. Periods shorter than one year are shown as cumulative total returns.

3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs 20 Yrs

Since Inception

(12/01/1984)

Series F -13.79 -13.79 -5.95 5.23 6.78 11.80 2.86 7.04

Management Expense Ratio (as of 12/31/2019 incl. HST)—1.4%

The indicated rates of return are the historical annual compounded total returns including changes in share or unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Please call Franklin Templeton Client Services at 1.800.387.0830 or visit www.franklintempleton.ca for the most recent month-end performance.

3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs 20 Yrs SinceInception

-20%

0%

20%

40%

Series F

-13.79 -13.79

-5.95

5.23 6.7811.80

2.867.04

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Series F 22.61 2.04 11.63 10.48 13.68 18.09 37.71 6.74 7.49 11.38

March 31, 2020Franklin U.S. Rising Dividends Fund

Product Profile

Franklin U.S. Rising Dividends Fund

Portfolio Manager Insight8

Performance Review

QUARTERLY KEY PERFORMANCE DRIVERS

Uniform rental company Cintas detracted from relative performance as the shutdown of large parts of the service economy to contain the spread of •the coronavirus has raised concerns about its earnings in the near term, given its exposure to the services sector. Prior to the various efforts to stem the coronavirus outbreak, Cintas reported an acceleration in organic sales growth in its fiscal second quarter and improving profitability.

Energy company Occidental Petroleum weighed on relative performance amidst the steep drop in crude oil prices following decisions by key oil •producers Saudi Arabia and Russia to increase production while demand levels fell. The company significantly increased its debt to finance its recent purchase of Anadarko Petroleum, which has led to investor concerns about its ability to meet its debt obligations.

Business software firm Microsoft Corp. boosted relative performance following a strong earnings report and on optimism its cloud-based services •could benefit as more people work from home during the coronavirus outbreak. The company has seen strength in its commercial cloud services and in sales of Windows as customers migrated away from Windows 7 in recent quarters. We believe that the trends of helping business customers move to the cloud and providing workers with productivity tools should support attractive growth for Microsoft over the medium to longer term.

Outlook & Strategy The emergence and disruption caused by the COVID-19 virus is creating significant uncertainty for the global economy and markets. More •specifically, we see two dynamics dominating investor psychology today that will likely persist for at least a few months: First, how long the coronavirus outbreak will last and, second, how deep the resulting economic damage will be from efforts to limit its spread. We are cautiously optimistic that shutting down parts of the economy to contain COVID-19 will eventually work, but how quickly is hard to assess.

The early economic data that has emerged recently has indicated that there has been a sudden and sharp decline in economic activity. We saw a •massive jump in weekly US jobless claims in late March and a recent deterioration in the services sector as governments forced retailers and restaurants to close their doors. Global supply chains are still strained, even as China begins to restart its economy after appearing to have successfully contained the outbreak. We are watching China for possible clues as to how quickly other economies can eventually recover.

We also are focused on the energy markets in which the price war between Saudi Arabia and Russia has significantly pressured crude oil prices as •both nations increase supply at a time when demand has fallen due to the weaker global economy.

Encouragingly, global policymakers have taken significant steps to limit the economic fallout and appear to be willing to take additional steps to •support markets and prevent sharper declines in employment levels. The US government passed a US$2 trillion stimulus bill in response to the outbreak, and the US Federal Reserve has slashed interest rates and restarted its asset purchase programme. A significant amount of liquidity has been injected in the system. The steps US and other global policymakers have taken are positive, but we believe it is still too early to gauge the impact they will have on mitigating the downturn. We believe investors are watching for clear signs from a health care perspective that show the spread of the virus has been contained. Progress must be made on this issue before significant improvement can be seen, in our view.

Although we are in uncharted waters, we believe the plunge in markets has presented us with several opportunities to improve the quality of the •portfolio through the purchase of new positions as well as additions to existing holdings. Successful investing, in our view, requires adhering to a clearly defined and time-tested investment approach. In our experience, companies with enduring business models that generate strong cash flows and which benefit from secular growth trends with attractive end markets should outperform peers. Those with prudent capital allocation plans, which includes continuously reinvesting in their business, and backed by strong management teams should perform well over the long term regardless of the near-term direction of the underlying economy. Our time-tested focus on healthy balance sheets is also advantageous in times of significant uncertainty.

We believe companies with consistently rising dividends should, over time, have the potential to realise stock price appreciation. We select portfolio •securities based on several criteria: We seek fundamentally sound companies (e.g., those with attractive margins and cash flow, along with low debt) that meet our standards for dividend growth consistency and magnitude, and we attempt to buy shares at what we believe are attractive prices.

8. The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of the date of this material and may change without notice. A portfolio manager’s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund’s portfolio selection process. Holdings are subject to change.

Stocks Sectors

HELPEDMicrosoft Corp. Financials (Stock Selection, Underweight)

West Pharmaceutical Services Inc. Consumer Staples (Stock Selection)

Roper Technologies Inc. Materials (Stock Selection)

HURTCintas Corp. Industrials (Overweight)

Raytheon Co. Information Technology (Stock Selection, Underweight)

Occidental Petroleum Corp. Energy (Stock Selection)

franklintempleton.ca 2

March 31, 2020


Portfolio Characteristics9

Portfolio Diversification

9. The portfolio characteristics listed are based on the fund’s underlying holdings, and do not necessarily reflect the fund’s characteristics. Due to data limitations all equity holdings are assumed to be the primary equity issue (usually the ordinary or common shares) of each security’s issuing company. This methodology may cause small differences between the portfolio’s reported characteristics and the portfolio’s actual characteristics. In practice, Franklin Templeton’s portfolio managers invest in the class or type of security which they believe is most appropriate at the time of purchase. The market capitalisation figures for both the portfolio and the benchmark are at the security level, not aggregated up to the main issuer. Source: Factset. Price ratio calculations for weighted average use harmonic means. Any exceptions to this are noted. The Estimated 3-5 Year EPS Growth uses simple weighted average means. There can be no assurance that the Estimated 3-5 Year EPS Growth will be realized. Information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. 10. Holdings of the same issuers have been combined. Top ten holdings information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent the fund’s entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in the fund, or that securities sold will not be repurchased. The portfolio manager reserves the right to withhold release of information with respect to holdings that would otherwise be included.

Portfolio S&P 500 Index

Price to Earnings (12-Month Trailing) 21.23x 17.80x

Price to Book 3.41x 2.84x

Price to Cash Flow 13.90x 10.49x

Weighted Average Market Capitalization (Millions in CAD) 257,416 399,899

Top Ten Holdings10

Percent of Total

Top Holdings Convertibles %

MICROSOFT CORP Software & Services 8.51

ROPER TECHNOLOGIES INC Capital Goods 5.45

STRYKER CORP Health Care Equipment & Services 3.73

BECTON DICKINSON AND CO Health Care Equipment & Services 3.64

LINDE PLC Materials 3.63

ACCENTURE PLC Software & Services 3.52

AIR PRODUCTS & CHEMICALS INC Materials 3.45

HONEYWELL INTERNATIONAL INC Capital Goods 3.39

MEDTRONIC PLC Health Care Equipment & Services 3.10

TEXAS INSTRUMENTS INC Semiconductors & Semiconductor Equipment 2.90


March 31, 2020


Supplemental Performance Statistics

11,12. Information is historical and may not reflect current or future portfolio characteristics. Percentage may not equal 100% due to rounding. All holdings are subject to change. 13. Beta, Information Ratio and Tracking Error information are measured against the S&P 500 Index. 14. Information Ratio is a way to evaluate a manager’s ability to outperform a benchmark in relation to the risk that manager is assuming, with risk defined as deviation from the benchmark. This measure is calculated by dividing the portfolio’s excess return (portfolio return less the benchmark return) by the tracking error (derived by taking the standard deviation of the monthly differences between the portfolio return and the benchmark return over time).

Sector Weightings vs. S&P 500 Index11

Percent of Total


S&P 500 Index

0% 5% 10% 15% 20% 25% 30%

Industrials

Health Care

Information Technology

Materials

Consumer Staples

Consumer Discretionary

Energy

Financ ials

Utilities

Real Estate

Communication Services

Cash & Cash Equivalents

24.57

21.19

19.54

10.90

9.24

9.17

1.85

1.58

0.00

0.00

0.00

1.97

8.22

15.38

25.48

2.43

7.79

9.80

2.65

10.93

3.57

3.01

10.74

0.00

Asset Allocation12

Percent of Total

98.0398.03

1.971.97

0% 100%25% 50% 75% 125%

Equity

Cash & Cash Equivalents

Supplemental Risk Statistics13,14

3 Yrs 5 Yrs 10 Yrs Since Inception

Standard Deviation (%) 12.71 12.21 10.20 13.42

Tracking Error (%) 3.30 3.25 3.57 7.66

Information Ratio -0.57 -0.69 -0.67 -0.49

Beta 1.01 0.96 0.90 0.84

Sharpe Ratio 0.30 0.47 1.06 0.19

The indicated rates of return are the historical annual compounded total returns including changes in share or unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Please call Franklin Templeton Client Services at 1.800.387.0830 or visit www.franklintempleton.ca for the most recent month-end performance.


March 31, 2020


Investment Philosophy and Process

Investment Team

Glossary

Beta: A measure of the magnitude of a portfolio’s past share-price fluctuations in relation to the ups and downs of the overall market (or appropriate market index). The market (or index) is assigned a beta of 1.00, so a portfolio with a beta of 1.20 would have seen its share price rise or fall by 12% when the overall market rose or fell by 10%.

Information Ratio: In investing terminology, the ratio of expected return to risk. Usually, this statistical technique is used to measure a manager’s performance against a benchmark. This measure explicitly relates the degree by which an investment has beaten the benchmark to the consistency by which the investment has beaten the benchmark.

Market Capitalisation: A determination of a company’s value, calculated by multiplying the total number of company stock shares outstanding by the price per share. Market capitalisation is expressed in millions of CAD.

Price to Book Value: The price per share of a stock divided by its book value (i.e., net worth) per share. For a portfolio, the value represents a weighted average of the stocks it holds.

Price to Cash Flow: Supplements price/earnings ratio as a measure of relative value for a stock. For a portfolio, the value represents a weighted average of the stocks it holds.

Price to Earnings (12-mo Trailing): The share price of a stock, divided by its per-share earnings over the past year. For a portfolio, the value represents a weighted average of the stocks it holds.

Sharpe Ratio: To calculate a Sharpe ratio, an asset’s excess returns (its return in excess of the return generated by risk-free assets such as Treasury bills) are divided by the asset’s standard deviation.

Standard Deviation: A measure of the degree to which returns vary from the average of its previous returns. The larger the standard deviation, the greater the likelihood (and risk) that performance will fluctuate from the average return.

Tracking Error: Measure of the deviation of the return of a product compared to the return of a benchmark over a fixed period of time. Expressed as a percentage. The more passively the investment is managed, the smaller the tracking error.

Portfolio Manager Years with Firm Years Experience

Nicholas Getaz, CFA, Portfolio Manager/Research Analyst 9 19

Matt Quinlan, Portfolio Manager/Research Analyst 14 25

Amritha Kasturirangan, CFA, Portfolio Manager/Research Analyst 10 19

Nayan M Sheth, CFA, Portfolio Manager/Research Analyst 6 18


March 31, 2020


15. Series F is available to investors participating in programs that do not require Franklin Templeton to incur distribution costs in the form of trailing commissions to dealers. As a consequence, the management fee on Series F is lower than on Series A. 16. “ADM” refers to the Investment Advisory Services Fee purchase option for series F,FT, PF, PF(Hedged), and PFT. Please see the simplified prospectus for further details.

Fund Codes15,16

Series Hedged Corporate Class Hedged Corporate Class

CAD USD CAD USD CAD USD CAD USD

Series A Front TML201 TML801 TML5829 — TML2046 TML2051 TML3608 —

Series A DSC TML301 TML901 TML5831 — TML2048 TML2053 TML3610 —

Series A Low Load TML516 TML517 TML5830 — TML2047 TML2052 TML3609 —

Series F TML231 TML841 TML5832 — TML2049 TML2054 TML3611 —

Series F ADM TML5016 TML5039 TML5833 — TML5140 TML5163 TML5158 —

Series I — — — — TML3740 TML3741 — —

Series O TML111 TML141 TML3834 — TML2050 TML2055 TML3612 —

Series PA Front TML5556 TML5559 TML5835 — — — — —

Series PA DSC TML5558 TML5561 TML5837 — — — — —

Series PA Low Load TML5557 TML5560 TML5836 — — — — —

Series PF TML3909 TML3910 — — TML3742 TML3743 — —

Series PF ADM TML5084 TML5110 — — TML5183 TML5198 — —

Series PF (Hedged) ADM TML5131 — — — — — — —

Series PFT TML3911 — — — — — — —

Series PFT ADM TML5128 — — — — — — —

Series PT Front TML5562 — TML5838 — — — — —

Series PT DSC TML5564 — TML5840 — — — — —

Series PT Low Load TML 5563 — TML5839 — — — — —

Series T Front TML3056 — TML5841 — TML3155 — TML3613 —

Series T DSC TML3058 — TML5843 — TML3157 — TML3615 —

Series T Low Load TML3057 — TML5842 — TML3156 — TML3614 —

Series I and V closed to new investors as of November 22, 2016.

Beginning in January 2017, investors switching between Corporate Class funds will trigger a capital gain or loss at the time of the switch due to certain changes in the income tax laws made by the federal government in 2016.


March 31, 2020


Important Legal Information

On November 22, 2019, Franklin Mutual U.S. Shares Fund and Franklin Mutual U.S. Shares Corporate Class merged into Franklin U.S. Rising Dividends Fund.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC. S&P does not sponsor, endorse, sell or promote and S&P index-based product.

Important data provider notices and terms available at: www.franklintempletondatasources.com

Indexes are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus or fund facts document before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Franklin Templeton and Franklin Templeton Canada are business names used by Franklin Templeton Investments Corp.

231 PPE 03/20

March 31, 2020

Franklin Templeton Canada 200 King Street West, Suite 1500 Toronto, ON M5H 3T4 Tel: 800.387.0830 Fax: 866.850.8241 franklintempleton.ca

© 2020 Franklin Templeton. All rights reserved.

franklin u.s. rising dividends fund...franklin u.s. rising dividends fund portfolio characteristics9...

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